Barclays forecasting weaker British pound into remainder of 2013
- Written by: Sam Coventry
Where is the British pound headed? If you were to ask analysts at Barclays the answer would be lower.
Briefing clients on the outlook for the British pound Yuki Sakasai at Barclays says:
"The MPC surprised the market last week by voting unanimously to hold the amount of QE unchanged. The diminished likelihood of further QE and the aggressive use of forward guidance to bring rates lower suggest a slower pace of GBP depreciation than otherwise, but we believe the UK economy will continue to face both external and internal headwinds in coming months despite recent data showing tentative signs of recovery, and the BoE is expected to keep its monetary policy stance accommodative for the foreseeable future.
"We maintain our medium-term bearish view on the GBP."
US dollar forecasted higher
With regards to the world's largest currency Sakasai says:
"We think that the modest pickup in cyclical activity and inflation and steady improvement in labor market conditions will be sufficient for the Fed to start tapering its asset purchases and expect the USD bullish trend to gather momentum into year-end as the contrast in monetary policy stance between the Fed and the rest of the world becomes even clearer. We would use any pullback in USD as an opportunity to enter structural long USD positions."
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